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Unformatted text preview: t, although the parties would be wise to include as much detail as possible,
so as to avoid misunderstandings later. However, a writing that states the quantity and rog80328_07_c07_134-156.indd 144 10/26/12 5:52 PM CHAPTER 7 Section 7.2 Statute of Frauds (§ 2-201) description of goods will be sufficient, even though it leaves out important terms such as
price, shipment, and quality of the goods to be sold, as long as these terms can be reasonably established.
There are four situations in which oral contracts for the sale of goods for $500 or more
will be enforceable despite the statute of frauds. The exceptions to the statute of frauds
requirement of a writing involve:
4. specially manufactured goods;
admissions in pleadings as to the existence of an oral contract;
partially performed contracts; and,
between two merchants, the confirming memo exception. Let’s take a look at each of these more closely.
An oral contract involving specially manufactured goods that are not suitable for sale in
the normal course of business is enforceable once substantial steps have been taken by
the seller toward performance of the contract. This is to protect the seller from incurring
undue costs and burden without compensation.
Example 7.18. On the telephone, Issa orders 125 polo shirts for her work
force from Quality Clothes, at a price of $20 per shirt. The shirts are to be
embroidered with Issa’s logo. Quality has done 50 shirts when Issa tries to
cancel the order. The contract is binding without a written document.
The second exception concerns admissions in pleadings. If a party to an oral contract
for goods worth $500 or more admits to entering into an oral contract in pleadings or in
testimony in open court, the contract will be enforceable to the extent that it is admitted.
Example 7.19. Buyer orally agrees
to buy ten paintings from seller
at $10,000 each, but subsequently
changes his mind. When he is
sued by the seller for breach of
contract, he testifies in open court
that he had agreed to buy two of
the paintings for $10,000, but that
he doesn’t have to because the
contract was an oral one. Buyer
is now obligated to buy the paintings, because of his admission, but
only the two that he has admitted
buying in his testimony.
Master baker Buddy Valastro of the TLC show Cake Boss
shows off a cake that would definitely qualify as specially
Sean M. Fitzgerald/Associated Press rog80328_07_c07_134-156.indd 145 This exception leads to a lot of people
in Buyer’s situation instead testifying
that they have no memory of agreeing
to anything like that, thus avoiding the
exception and possible perjury charges
for lying under oath. 10/26/12 5:52 PM Section 7.3 Modification of the Sales Contract CHAPTER 7 The third exception concerns partially performed contracts. A buyer’s acceptance of goods
ordered under an oral contract is binding, but only as to the goods actually accepted by
Example 7.20. Buyer orders by telephone from seller five Oriental rugs at
a price of $2,000 each. When the first...
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